Stock dividend: Investor. Security Data Company has outstanding 50,000 shares of common stock currently selling at $40 per share. The firm most recently had earnings available for common stockholders of $120,000, but it has decided to retain these funds and is considering either a 5% or a 10% stock dividend in lieu of a cash dividend. a. Determine the firm's current earnings per share. b. If Sam Waller currently owns 500 shares of the firm's stock, determine his proportion of ownership currently and under each of the proposed stock dividend plans. Explain your findings. c. Calculate and explain the market price per share under each of the stock dividend plans. d. For each of the proposed stock dividends, calculate the earnings per share after payment of the stock dividend. e. What is the value of Sam's holdings under each of the plans? Explain. f. Describe two factors company leaders would want to consider in making Payout Policy decisions. a. Determine the firm's current earnings per share. Earnings available for common stock holders Common stock outstanding Earnings per share $120,000 50,000 b. If Sam Waller currently owns 500 shares of the firm's stock, determine his proportion of ownership currently and under each of the proposed stock dividend plans. Explain your findings. 500 5% 10% Waller's current shares 5% stock dividend plan 10% stock dividend plan Waller's shares with 5% dividend Waller's shares with 10% dividend Weller's current percent Weller's percent with 5% dividend Weller's percent with 10% dividend His proportionate ownership remains the same in each case because he is receiving a proportional share of any new stock. C. Calculate and explain the market price per share under each of the stock dividend plans. $40 Current market price Market price with 5% dividend Market price with 10% dividend The market price of the stock will drop to maintain the same proportion because more shares are being used. d. For each of the proposed stock dividends, calculate the earnings per share after payment of the stock dividend. EPS with 5% dividend EPS with 10% dividend e. What is the value of Sam's holdings under each of the plans? Explain. Current value of Weller's holdings Weller's value with 5% dividend Weller's value with 10% dividend f. Describe two factors company leaders would want to consider in making Payout Policy decisions